Business Wire | Aug 3, 2020 04:15PM EDT

Bogota Financial Corp. Reports Results for the Three and Six Months Ended June 30, 2020

Aug. 03, 2020

TEANECK, N.J.--(BUSINESS WIRE)--Aug. 03, 2020--Bogota Financial Corp. (the "Company") (NASDAQ: BSBK), the holding company for Bogota Savings Bank (the "Bank"), reported net income for the three months ended June 30, 2020 of $1.4 million, compared to net income of $608,000 for the comparable prior year period. The Company reported net income for the six months ended June 30, 2020 of $65,000 compared to a net income of $970,000 for the comparable prior year period. The Company contributed cash and stock with a value of $2.9 million ($2.1 million after-tax) to the Bogota Charitable Foundation during the six months ended June 30, 2020. Without this contribution, net income would have been $2.0 million.

On January 15, 2020, the Company became the holding company for the Bank when it completed the reorganization of the Bank into a two-tier mutual holding company form of organization. In connection with the reorganization, the Company sold 5,657,735 shares of common stock at a price of $10 per share, for gross proceeds of $56.6 million. The Company also issued 263,150 shares of common stock and $250,000 in cash to Bogota Savings Bank Charitable Foundation, Inc., and issued 7,236,640 shares of common stock to Bogota Financial, MHC, and its New Jersey-chartered mutual holding company. Shares of the Company's common stock began trading on January 16, 2020 on the Nasdaq Capital Market under the trading symbol "BSBK."

Other Financial Highlights:

* Total assets decreased $27.9 million, or 3.6%, to $738.7 million from $766.6 million at December 31, 2019. Unfilled subscriptions of $41.5 million from the stock offering were returned following the completion of the stock offering. Excluding these funds as of December 31, 2019, total assets increased by 1.8% during the six months ended June 30, 2020. * Net loans increased $50.5 million, or 9.4%, to $587.7 million from $537.2 million at December 31, 2019. * Total deposits were $492.4 million, decreasing $5.3 million, or 1.1%, during the six months ended June 30, 2020. * Return on average assets was 0.04% for the six-month period ended June 30, 2020 compared to 0.59% for the corresponding period of 2019. Without the charitable foundation contribution, the return on average assets would have been 1.12% for the six-month period ended June 30, 2020. * Return on average equity was 0.22% for the six-month period ended June 30, 2020 compared to 5.35% for the same period of 2019. Without the charitable foundation contribution, the return on average equity would have been 6.12% for the six-month period ended June 30, 2020.

As a qualified Small Business Administration lender, we were automatically authorized to originate loans under the Paycheck Protection Program ("PPP"). As of June 30, 2020, we have received and processed 113 PPP applications totaling approximately $10.5 million.

COVID

We are also providing assistance to individuals and small business clients directly impacted by the COVID-19 pandemic by allowing borrowers to modify their loans. Through June 30, 2020, the Company granted $68.0 million of loan modifications which represented 12.0% of the total loan portfolio allowing customers who were affected by the COVID-19 pandemic to defer principal and/or interest payments. These short-term loan modifications will be treated in accordance with Section 4013 of the CARES Act and will not be treated as troubled debt restructurings during the short-term modification period if the loan was not in arrears at December 31, 2019. Furthermore, these loans will continue to accrue interest and will not be tested for impairment during the short-term modification period. Details with respect to actual loan modification are as follows:

Number Balance as Percent of Total of of Loans as ofType of Loan Loans June 30, June 30, 2020 2020

One- to four-family 143 $ 42,619,955 7.3%residential real estate

Commercial real estate 14 19,561,427 3.3%

Multi-family real estate 10 5,293,122 0.9%

Commercial and industrial 2 496,036 0.1%

Consumer - - -

Other - - -

Total 169 $ 67,970,540 11.6%



Joseph Coccaro, President and Chief Executive Officer, said, "During the first quarter we successfully converted the Bank to a two-tier mutual holding company structure. We are pleased with our continued strategy to expand our loan portfolio and the positive overall impacts of doing so on assets and income. We continue our efforts to expand our market presence, improve and expand our technology platform and offerings and manage our interest rate risk. We have been pleased with our excellent loan quality, and low loan delinquencies during the first six months of 2020."

Mr. Coccaro continued, "The COVID-19 pandemic has created turmoil around the globe. Virtually all businesses have been impacted by the mandated business closures and restrictions. Thankfully banking is an essential business and we are working very hard helping our customers with emergency funding, loan deferrals and assistance with the PPP. I am hopeful that through the funding of the PPP, most businesses will rebound and there will be a recovery. The economic impact of the COVID-19 pandemic on the Company's operations was not material during the first six months ended June 30, 2020. However, there could be a more significant impact on the Company's financial results going forward due to increases in loan delinquencies, problem assets or foreclosures, a decline in collateral value or an increase in allowance for loan losses. I am optimistic community banking will continue to prosper by supporting individuals and small business looking for a community bank."

Income Statement Analysis

Compared to the second quarter of 2019, net interest income increased $504,000, or 18.1%, to $3.3 million for the three months ended June 30, 2020. During the same period, our net interest margin increased from 1.75% to 1.88%, while the ratio of average interest-earning assets to average interest-bearing liabilities improved 9.8% to 122.67%. For the six months ended June 30, 2020, net interest income increased $773,000, or 13.8%, to $6.4 million. Overall, there was a 9 basis point increase in net interest margin to 1.85%, while the ratio of average interest-earning assets to average interest-bearing liabilities improved 9.5% to 121.9%. The increase in net interest margin during the three and six months ended June 30, 2020 was mostly due to the higher ratio of average interest-earning assets to average interest-bearing liabilities.

We recorded a provision for loan losses of $225,000 and $250,000 for the three and six month periods ended June 30, 2020, respectively, compared to no provision for loans losses for the same periods last year. Higher commercial real estate loan balances and increased risks factors associated with COVID 19 were the reasons for the provision.

Non-interest income was $768,000 for the three months ended June 30, 2020, an increase of $628,000, or 451.1%, compared to $139,000 in the prior year period. For the six months ended June 30, 2020, non-interest income totaled $889,000, an increase of $609,000, or 217.9%, from the prior year period. Death benefit proceeds received on our investment in Bank Owned Life Insurance was the primary reason for the increase during both periods.

For the three months ended June 30, 2020, non-interest expenses increased $45,000 to $2.2 million, over the comparable 2019 period. Professional fees increased $130,000, or 208.1%, due to additional expense associated with becoming a public company.

Salaries and employee benefits decreased $18,000, or 1.5%, attributable to deferred salary expense for increased loan volume. The reduction of other general operating expenses was mainly due to decreases in data processing costs, FDIC insurance assessment and occupancy expense.

For the six months ended June 30, 2020, non-interest expenses increased $2.6 million to $7.2 million, over the comparable 2019 period. Data processing costs decreased $426,000, or 57.8%, due to $360,000 in de-conversion expenses in 2019 in connection with the Bank's data processing conversion. Expenses for the six months ended June 30, 2020 included a $2.9 million contribution to the Bogota Charitable Foundation that was formed during the reorganization of the Bank into a two-tier mutual holding company form of organization. The increase of other general operating expenses was mainly due to increases in professional fees associated with the expense of becoming a public company. Without the contribution to the charitable foundation in 2020 and the de-conversion expense in 2019, non-interest expenses increased $89,000 to $4.4 million compared to the same period last year.

Balance Sheet Analysis

Total assets were $738.7 million at June 30, 2020, representing a decrease of $27.9 million, or 3.6%, from December 31, 2019. Net loans increased $50.5 million or 9.4%, due to new production of $121.4 million, consisting of a relatively equal mix of real estate loans and commercial loans, which was partially offset by $70.9 million in repayments. Securities held to maturity decreased $1.5 million mostly due to maturities in municipal bonds and government agency bonds which were not replaced. Cash and due from banks decreased $76.1 million during the period primarily because of $41.5 million in offering subscriptions that were refunded due to the oversubscription of the stock offering.

Delinquent loans decreased $232,000, or 40.8%, during the six-month period ended June 30, 2020, finishing at 0.1% of total loans, or $337,000. During the same timeframe, non-performing assets increased $85,000, or 14.4%, to $675,000 and were 0.09% of total assets at June 30, 2020. Our allowance for loan losses was 0.38% of total loans and 335.87% of non-performing loans at June 30, 2020.

Total liabilities decreased $79.3 million, or 11.5%, to $612.3 million mainly due to $90.4 million in gross subscriptions that was either converted to common stock or due to the oversubscription of the stock offering. Deposits decreased $5.3 million, or 1.1%, mostly due to a decrease in certificate of deposits as the Bank had a high volume of maturities not all of which were renewed. Federal Home Loan Bank advances increased $16.0 million, or 16.5%, as borrowings were available at lower rates than deposits.

Stockholders' equity increased $51.4 million to $126.3 million, primarily due $54.6 million of net proceeds raised in the stock offering. At June 30, 2020, the Company's ratio of average stockholders' equity-to-total assets was 17.25%, compared to 10.96% at December 31, 2019.

EXPLANATORY NOTE

The Company was formed to serve as the mid-tier stock holding company for the Bank in connection with the reorganization of the Bank and its mutual holding company, Bogota Financial, MHC, into the two-tier mutual holding company structure. As of December 31, 2019 and for the three and six months ended June 30, 2019, the reorganization had not been completed and the Company had no assets or liabilities and had not conducted any business activities other than organizational activities. Accordingly, the unaudited financial statements and other financial information at and for the 2019 periods contained relate solely to the consolidated financial results of the Bank.

About Bogota Financial Corp.

Bogota Financial Corp. is a Maryland corporation organized as the mid-tier holding company of Bogota Savings Bank and is the majority-owned subsidiary of Bogota Financial, MHC. Bogota Savings Bank is a New Jersey chartered stock savings bank that has served the banking needs of its customers in northern and central New Jersey since 1893. It operates from two offices located in Bogota and Teaneck, New Jersey.

Forward-Looking Statements

This press release contains certain forward-looking statements about the Company and the Bank. Forward-looking statements include statements regarding anticipated future events and can be identified by the fact that they do not relate strictly to historical or current facts. They often include words such as "believe," "expect," "anticipate," "estimate," and "intend" or future or conditional verbs such as "will," "would," "should," "could," or "may." Forward-looking statements, by their nature, are subject to risks and uncertainties. Certain factors that could cause actual results to differ materially from expected results include increased competitive pressures, changes in the interest rate environment, general economic conditions or conditions within the securities markets, and legislative and regulatory changes that could adversely affect the business in which the Company and the Bank are engaged.

Further, given its ongoing and dynamic nature, it is difficult to predict the full impact of the COVID-19 outbreak on our business. The extent of such impact will depend on future developments, which are highly uncertain, including when the coronavirus can be controlled and abated and when and how the economy may be reopened or remain open. As the result of the COVID-19 pandemic and the related adverse local and national economic consequences, we could be subject to any of the following risks, any of which could have a material, adverse effect on our business, financial condition, liquidity, and results of operations: demand for our products and services may decline, making it difficult to grow assets and income; if the economy is unable to substantially reopen or remain open, and high levels of unemployment continue for an extended period of time, loan delinquencies, problem assets, and foreclosures may increase, resulting in increased charges and reduced income; collateral for loans, especially real estate, may decline in value, which could cause loan losses to increase; our allowance for loan losses may have to be increased if borrowers experience financial difficulties, which will adversely affect our net income; the net worth and liquidity of loan guarantors may decline, impairing their ability to honor commitments to us. As the result of the decline in the Federal Reserve Board's target federal funds rate to near 0%, the yield on our assets may decline to a greater extent than the decline in our cost of interest-bearing liabilities, reducing our net interest margin and spread and reducing net income. Our cyber security risks are increased as the result of an increase in the number of employees working remotely; and FDIC premiums may increase if the agency experience additional resolution costs.

The Company undertakes no obligation to revise these forward-looking statements or to reflect events or circumstances after the date of this press release.

BOGOTA FINANCIAL CORP.

CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

June 30, 2020 December 31, 2019

Assets unaudited audited

Cash and due from banks $ 5,655,248 $ 5,176,241

Interest-bearing deposits in other banks 46,154,222 122,686,318

Cash and cash equivalents 51,809,470 127,862,559

Securities available for sale 12,563,822 13,748,561

Securities held to maturity (fair value of 54,611,029 56,093,317 $56,100,917 and $56,582,299, respectively)

Loans, net of allowance of $2,266,174 and 587,680,746 537,157,217 $2,016,174, respectively

Premises and equipment, net 4,102,503 4,196,753

Federal Home Loan Bank (FHLB) stock 6,324,100 5,672,700

Accrued interest receivable 2,671,225 2,021,360

Bank owned life insurance 16,736,735 17,409,745

Other assets 2,173,950 2,450,042

Total Assets $ 738,673,580 $ 766,612,254

Liabilities and Equity

Liabilities

Non-interest bearing $ 25,528,305 $ 16,122,231

Interest bearing 466,886,915 481,627,221

Total Deposits 492,415,220 497,749,452

FHLB advances 113,105,606 97,092,484

Advance payments by borrowers for taxes and 2,692,262 3,191,706 insurance

Subscription offering proceeds - 90,349,840

Other liabilities 4,128,541 3,250,925

Total liabilities 612,341,629 691,634,407

Commitments and Contingencies-see note 6

Stockholders' Equity

Preferred stock $0.01 par value 1,000,000shares authorized, none issued and - - outstanding at June 30, 2020

Common stock $0.01 par value, 30,000,000shares authorized, 13,157,525 issued and 131,575 - outstanding at June 30, 2020

Additional Paid-In capital 57,022,232 -

Retained earnings 75,357,002 75,291,512

Unearned ESOP shares (503,465 shares) (5,879,446 ) -

Accumulated other comprehensive loss (299,412 ) (313,665 )

Total stockholders' equity 126,331,951 74,977,847

Total liabilities and stockholders' equity $ 738,673,580 $ 766,612,254

BOGOTA FINANCIAL CORP.

CONSOLIDATED STATEMENTS OF INCOME

Three months ended Six months ended June 30, June 30,

2020 2019 2020 2019

(unaudited)

Interest income

Loans $ 5,245,931 $ 5,067,063 $ 10,343,182 $ 10,010,861

Securities

Taxable 405,146 464,481 836,199 941,701

Tax-exempt 13,220 25,722 24,881 65,950

Otherinterest-earning 151,913 215,427 529,276 444,794 assets

Total interest 5,816,210 5,772,693 11,733,538 11,463,306 income

Interest expense

Deposits 2,041,512 2,513,871 4,357,833 4,947,865

FHLB advances 488,854 477,160 1,005,926 918,739

Total interest 2,530,366 2,991,031 5,363,759 5,866,604 expense

Net interest 3,285,844 2,781,662 6,369,779 5,596,702 income

Provision for 225,000 - 250,000 - loan losses

Net interestincome after 3,060,844 2,781,662 6,119,779 5,596,702 provision forloan losses

Non-interest income

Fees and service 12,327 31,957 32,045 60,440 charges

Bank owned life 749,091 102,164 848,802 202,261 insurance

Other 6,228 5,181 8,182 16,976

Totalnon-interest 767,646 139,302 889,029 279,677 income

Non-interest expense

Salaries andemployee 1,202,387 1,220,789 2,459,986 2,474,620 benefits

Occupancy and 159,376 175,208 328,916 350,572 equipment

FDIC insurance 26,000 44,369 71,000 89,456 assessment

Data processing 165,211 172,940 311,237 737,043

Advertising 42,180 60,000 101,814 120,000

Director fees 178,894 168,380 365,176 337,945

Professional 192,572 62,500 324,906 122,500 fees

Contribution toCharitable - - 2,881,500 - Foundation

Other 193,070 210,807 387,771 388,994

Totalnon-interest 2,159,690 2,114,993 7,232,306 4,621,130 expense

Income (loss)before income 1,668,800 805,971 (223,498 ) 1,255,249 taxes (benefit)

Income taxexpense 265,727 197,700 (288,988 ) 285,160 (benefit)

Net income $ 1,403,073 $ 608,271 $ 65,490 $ 970,089

Earnings per $ 0.11 - $ 0.01 - Share

Weighted averageshares 12,650,748 - 11,675,010 - outstanding

BOGOTA FINANCIAL CORP.

SELECTED RATIOS

At or For the Three At or For the Six Months Months Ended June 30, Ended June 30,

2020 2019 2020 2019

Performance Ratios (1):

Return on average assets 0.77 % 0.09 % 0.04 % 0.29 %(2)

Return on average equity 4.46 % 0.83 % 0.22 % 2.66 %(3)

Interest rate spread (4) 1.55 % 1.52 % 1.50 % 1.54 %

Net interest margin (5) 1.88 % 1.75 % 1.85 % 1.76 %

Efficiency ratio (6) 53.28 % 72.41 % 99.64 % 78.64 %

Average interest-earningassets to average 122.67 % 111.74 % 121.99 % 111.43 %interest-bearing liabilities

Net loans to deposits 119.35 % 106.73 % 119.35 % 106.73 %

Equity to assets (7) 17.25 % 11.38 % 17.25 % 11.38 %

Capital Ratios:

Tier 1 capital (to adjusted 26.73 % 11.14 %total assets)

Tier 1 capital (to 26.28 % 17.50 %risk-weighted assets)

Total capital (to 26.26 % 17.98 %risk-weighted assets)

Common equity Tier 1capital (to risk-weighted 17.59 % 17.50 %assets)

Asset Quality Ratios:

Allowance for loan losses 0.38 % 0.37 %as a percent of total loans

Allowance for loan lossesas a percent of 335.87 % 372.64 %non-performing loans

Net recoveries to averageoutstanding loans during 0.00 % 0.00 %the period

Non-performing loans as a 0.11 % 0.10 %percent of total loans

Non-performing assets as a 0.09 % 0.08 %percent of total assets

____________________(1) Performance ratios are annualized. (2) Represents net income divided by average total assets. (3) Represents net income divided by average equity. Represents the difference between the weighted average yield on average interest-earning assets and the weighted average cost of average(4) interest-bearing liabilities. Tax exempt income is reported on a tax equivalent basis using a combined federal and state marginal tax rate of 30%.

Represents net interest income as a percent of average interest-earning(5) assets. Tax exempt income is reported on a tax equivalent basis using a combined federal and state marginal tax rate of 30% for 2020 and 2019.

(6) Represents non-interest expenses divided by the sum of net interest income and non-interest income.

(7) Represents average equity divided by average total assets.

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CONTACT: Joseph Coccaro - President & CEO 201-862-0660 ext. 1110